Exports dip seen lingering

THE DEPARTMENT of Finance’s chief economist sees the exports slump continuing in the near-term due to slower orders from top destinations such as China and Japan, hence urges exporters to expand their markets while churning out innovative products.

“Philippine exporters need to diversify their market base and product lines further because the contraction in major markets may continue for some time,” Finance Undersecretary Gil S. Beltran said last week in an economic bulletin.

Merchandise export revenues slid for the seventh consecutive month in October, bringing the 10-month total to $48.9 billion, down 6.2 percent year-on-year.

The National Economic and Development Authority (Neda) has been blaming weak global demand for the slump in exports.

“Exports to almost all major partners declined substantially, with the exception of the US and Hong Kong… Exports to Japan, the country’s largest trading partner, declined by more than 12 percent; the sustained depreciation of the Japanese yen may have contributed to the decrease in import demand by Japanese manufacturers. Shipments to China slumped by nearly 25 percent,” Beltran noted.

Also, Beltran cited that “the PMI [purchasing managers’ index] of many major trading partners have stayed below 50 (which means economic activity has contracted) such as those in East Asia,” specifically China, Hong Kong, South Korea and Taiwan.

The PMI is an indicator of the manufacturing sector’s economic health.

While Japan was among the trading partners showing “expanding economic activities” with a PMI of 52.6 last November, Beltran warned that “as the Japanese yen enters another phase of weakness vis-à-vis the [US] dollar, Japanese importers may be inclined to import less.”

Last week, Neda Director-General and Economic Planning Secretary Arsenio M. Balisacan conceded that the yearend value of exports would likely be below last year’s $62.1 billion.